Rumors of ‘backroom deal’ on RFS angers Iowans

It didn’t take long for the White House to distance itself from reports last week that President Donald Trump would sign an executive order regarding the Renewable Fuel Standard. The renewable fuels industry, including manufacturers and marketers of ethanol and biodiesel in Iowa, were upset after news broke on Feb. 27 that the president would sign an order to shift the federal requirement for blending ethanol and biodiesel into the nation’s fuel supply from oil refiners to fuel retailers.

Such a move, said the Iowa Renewable Fuels Association and others, would hurt Iowa farmers and consumers by reducing the widespread use of biofuels. There was a lot of finger-pointing last week over the possibility of a “backroom deal” between the national Renewable Fuels Association and Trump adviser Carl Icahn, a billionaire investor in CVR Refining, a Texas energy company.

“This is nothing more than a couple of self-interested parties trying to reap financial gains by influencing the government,” said Jeff Broin, CEO of Poet, a company based in South Dakota that is the world’s largest ethanol producer. Poet has seven ethanol plants in Iowa.

Change would hurt the RFSEarly in the day on Feb. 27, Bob Dinneen, CEO of the Renewable Fuels Association, said in a statement that a Trump official contacted RFA, a lobbying group for the biofuel industry, saying an executive order from the White House was pending. Despite RFA’s opposition, “we were told the order was not negotiable,” said Dinneen. Other renewable-fuel groups issued press releases charging that Dinneen’s group tried to negotiate a deal with Icahn, asking the Trump administration to allow summer use of E15, a 15% ethanol blend in gasoline. Most gasoline sold in the U.S. is 10% ethanol.

“If this rumor is true, this proposal would severely harm America’s progress under the RFS and impose indefensible costs on consumers,” said Emily Skor, CEO of Growth Energy. Growth Energy, like RFA, is a Washington, D.C., advocacy group representing ethanol producers. She said a shift requiring blending of biofuels into gasoline and diesel to be done by retailers instead of refiners would require large-scale restructuring of fuel markets. That would create turmoil for fuel retailers, higher costs for consumers and years of uncertainty for hundreds of thousands of workers in the biofuel industry.”

Skor said RFA’s largest member, Valero, which petitioned the government for the renewable fuels blending change, would profit from the “self-serving insider deal.” The RFA, she said, was not advocating on the “side of the ethanol industry or the American farmer.”

Iowa Senators oppose changeOn March 1, U.S. Sen. Chuck Grassley, R-Iowa, said he has “no reason to believe that such an executive order is pending or is imminent.” Grassley, who opposes the shift, said the Trump administration “so far has committed to upholding” the Renewable Fuel Standard, the federal law requiring refiners to blend a certain amount of ethanol and biodiesel into gasoline and diesel fuel each year.

On Feb. 28, Fuels America, a coalition of renewable fuels groups, severed ties with the Renewable Fuels Association, saying RFA “elected to lend its support to Icahn’s attempt to “mislead biofuel advocates into accepting a rewrite of the RFS in exchange for changes to the outdated Environmental Protection Agency regulations that limit summertime sales of ethanol.” The RFA then issued a statement saying it doesn’t support “any deal or negotiations” on the point of obligation (POO) — the blending rule contained in in the Renewable Fuel Standard.

RFS overseen by EPAU.S. Sen. Joni Ernst, R-Iowa, issued a press release saying she opposes a change in the RFS, saying it would benefit a “select few.” She said, “I will continue to push back any attempts to destabilize the renewable fuels marketplace, regardless of where such efforts originate.” Even the American Petroleum Institute opposes the change in the Renewable Fuel Standard, saying “it is not real reform.” The oil industry group wants the government to eliminate the federal RFS.

The RFS, overseen by the U.S. Environmental Protection Agency, requires biofuels to be blended with gasoline and diesel fuel to reduce air pollution. Iowa is the nation’s largest producer of ethanol and biodiesel. Broin, the CEO of Poet, said “agriculture needs the support that comes from using corn and soybeans to make renewable fuels, especially as the U.S. farm economy is now struggling with an economic downturn due to prolonged lower grain prices.”

He added, “Today we have commodity surpluses and low prices. Net farm income is down nearly 50% from 2013. Iowa cropland values are down 17%. We need to move from the use of E10 ethanol in this nation to the widespread use of E15. That would use 2 billion bushels more corn per year and play a significant role in alleviating the ag financial crises the U.S. is continuing to experience.”

IRFA firmly against changeThe Iowa Renewable Fuels Association issued this statement on Feb. 28: “In light of numerous media reports that a ‘deal’ has been negotiated between Carl Icahn and the national Renewable Fuels Association regarding changing the Renewable Fuel Standard (RFS) point of obligation (POO) in return for fixing volatility issues for E15 — the Iowa Renewable Fuels Association (IRFA) and its members remain firmly opposed to changing the point of obligation for the RFS.”

The IRFA release adds: “We do not support any ‘deal’ or negotiations being discussed in the media, nor does this stance represent the views of our members. Changing the POO rewards those companies and people who haven’t worked to make the RFS the success it is today. It pulls the rug out from under Iowa fuel retailers who have invested to bring ethanol and biodiesel choices to the public. IRFA will strenuously oppose any change in POO, and our strong message to the White House remains the same: Don’t Mess With the RFS.”